Why Constant Contact (CTCT) Stock Is Up After-Hours Tuesday

NEW YORK (TheStreet) -- Constant Contact (CTCT) was surging 12.1% to $25.01 in after-hours trading Tuesday after the company raised its guidance for the first quarter and the full-year 2014.

Constant Contact now expects to report revenue of between $78.7 million and $78.8 million for the first quarter, up from its previous guidance of between $77.1 million and $77.5 million. Analysts estimate revenue of $77.3 million for the quarter. Adjusted EBITDA is expected to be between $10.6 million and $10.8 million, compared to previous guidance of $9.6 million to $10.3 million.

The online marketing software maker expects revenue of $330 million for 2014, making for a 15.5% increase from the previous year. Analysts expect revenue of $323.4 million for the year.

Constant Contact expects to announce its first-quarter results on May 1.

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TheStreet Ratings team rates CONSTANT CONTACT INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CONSTANT CONTACT INC (CTCT) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 16.1%. Since the same quarter one year prior, revenues rose by 13.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • CTCT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, CTCT has a quick ratio of 2.33, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for CONSTANT CONTACT INC is currently very high, coming in at 80.12%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CTCT's net profit margin of 6.02% significantly trails the industry average.
  • Net operating cash flow has increased to $12.96 million or 11.05% when compared to the same quarter last year. Despite an increase in cash flow, CONSTANT CONTACT INC's average is still marginally south of the industry average growth rate of 11.60%.
  • Compared to its closing price of one year ago, CTCT's share price has jumped by 87.29%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: CTCT Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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